S&P: South Africa-Based Liberty Group Ltd.'s Proposed Unsecured Subordinated Notes Rated 'zaAA+'
Under our methodology for rating such issues, we apply a one-notch downward adjustment to the global scale ratings on the issuer for deferability, and another one on the resulting national scale rating for subordination. As a result, we rate the proposed notes one notch below our 'zaAAA' South Africa national scale rating on the issuer, Liberty.
Liberty can redeem the notes on the specified maturity date and also has the right to redeem the notes on a tax or regulatory event. For redemptions prior to the maturity date, Liberty requires the prior consent of the registrar.
We expect to classify the notes as having minimal equity content under our hybrid criteria as the maturity is less than 20 years. Including this debt issuance, we estimate Liberty's financial leverage (debt plus hybrid, divided by the sum of economic capital available, debt, and hybrid) and fixed-charge coverage (EBITDA divided by interest on senior and subordinated debt) will remain neutral rating factors.